This article was written by Tom Snell, SCORE Orange County Business Mentor
Sweep out your cottages, the law has changed! But don’t open the door yet, we’re not quite there.
Until recently, California state law prohibited sales of food products from home production facilities. However, starting on 1 January 2013, a change will allow small home-based operations to produce non-hazardous materials for sale. But not until 1 January 2013, and you will require a permit to do so. A shorthand version of the non-hazardous rules means that anything that requires for refrigeration is a no-no. This whole new deal is called cottage food operations.
Remember, everything that follows here is to ensure food safety for all of us.
While this is good news for some of you, as yet there are no application forms developed nor have the fees been fixed. The OC health department is feverishly working on both of these and hopefully there should be information on this any day now. When they are ready, you will be advised are two separate programs, trickily called programs A and B:
A) This allows you to produce at home and sell directly to consumers. That would apply to bake sales farmers markets, swap meets, church functions etc. For this you will simply have to register with the health department.
B) This is for sales made by you to another party who in turn sells to the consumer. For example, you sell hamburger buns to Joe’s gourmet hamburger outlet. Then the complete hamburger is sold by Joe to the consumer. For this you will require a permit from the health department. There will be a one-time startup inspection of your facilities. You also allow them the right to inspect your inspection under carefully controlled conditions.
This is small business, not big business. There is a limit of $35,000 of sales per calendar year for 2013. But Mama, that’s a lot of cupcakes! The limit goes to $45,000 in year 2014. You are expected to keep track of your sales against this limit.
So what might you be able to do in the meantime, while we wait for the pot to boil? Here’s a couple of ideas for you:
1) Determine exactly what it is you want to make. If it’s cookies you will have to say cookies not baked goods which can include a lot of things. For either A or B you will have to tell them what you will be making on your application and if you change it later, you will have to notify them.
2) Determine how you plan to sell your goods, since it makes a difference as to which program you are applying for. If you’re selling it yourself it will be A), but if you’re selling it to a retail outlet it will be B).
3) Figure out how you’re going to package your goods. You will have to have an informational label on them which will include ingredients, allergen warnings, indications that this is a homemade product etc. Hopefully, soon we will be able to provide a sample label. You can count on it that it will be a lot of information on a very small space, and that is attached to your package with something stronger than bubblegum.
4) Insurance! Aaargh!! Lawsuits against food producers are frequent, big, nasty and expensive. You will need very extensive liability insurance.. First you can check with your homeowners policy, but I think in most cases you will find they will not provide this coverage to you. This means you must check with another insurance company that provides it. This is important. If you want to do one of these programs you could start this investigation right now.
5 ) Get an authorized food handlers certification, you’re going to need one.
Since food safety is so important, the California Public Health Department food section is working on a specific list of products that can be made as well as a new training class for a mandatory certificate on food management, a considerably expanded version over the current food handlers document. Stay tuned, this could be fun!
The ink is only half dry on the new law. Be patient. There is much more to tell even if you don’t really have a cottage.
An opportunity awaits for those that wish to try this new program. We at SCORE will be here to help you implement your own success.